Improving energy efficiency has become increasingly important in data centers in recent years to reduce the rapidly growing tremendous amounts of electricity consumption. The power dissipation of the physical servers is the root cause of power usage of other systems, such as cooling systems. Many efforts have been made to make data centers more energy efficient. One of them is to minimize the total power consumption of these servers in a data center through virtual machine consolidation, which is implemented by virtual machine placement. The placement problem is often modeled as a bin packing problem. Due to the NP-hard nature of the problem, heuristic solutions such as First Fit and Best Fit algorithms have been often used and have generally good results. However, their performance leaves room for further improvement. In this paper we propose a Simulated Annealing based algorithm, which aims at further improvement from any feasible placement. This is the first published attempt of using SA to solve the VM placement problem to optimize the power consumption. Experimental results show that this SA algorithm can generate better results, saving up to 25 percentage more energy than First Fit Decreasing in an acceptable time frame.